Limited Liability Partnerships Bill [H.L.] -
Amendments to be debated in the House of Lords
- continued
House of Lords

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Clause 10
 
  
BY THE LORD LUCAS
 
35     Page 5, line 6, after first ("partnership") insert (", or any other activity or function of such a partnership,") 
  
BY THE LORD McINTOSH OF HARINGEY
 
36     Page 5, line 10, at end insert-- 
     ("(  )  In section 362(2)(a) of that Act (loan to buy into partnership), after "partner" insert "in a limited partnership registered under the Limited Partnerships Act 1907".")1907 c. 24.
  
BY THE LORD LUCAS
 
37     Page 5, leave out lines 13 and 14 and insert ("For a limited liability partnership--") 
38     Page 5, line 25, at end insert--
 
    ("(  )  Notwithstanding the generality of subsections (1) and (2) above, regulations may provide for a limited liability partnership in liquidation or receivership to be taxed as if it were a limited liability company.")
 
  
After Clause 10
 
  
BY THE LORD GOODHART
THE LORD PHILLIPS OF SUDBURY
THE LORD SHARMAN
 
39     Insert the following new Clause-- 
     ("  .  In section 362 of the Income and Corporation Taxes Act 1988, after subsection (2) insert--
        (3)  For the purposes of subsection (2), an individual who is a member of a limited liability partnership shall be deemed to be a member of the limited liability partnership otherwise than as a limited partner."")
Interest payment relief on loan to buy into partnership.
  
Clause 12
 
  
BY THE LORD McINTOSH OF HARINGEY
 
40     Page 5, line 46, leave out from ("partnership") to end of line 4 on page 6 and insert ("in connection with its incorporation within the period of one year beginning with the date of incorporation if the following two conditions are satisfied.
 
    (1A)  The first condition is that immediately before its incorporation the person--
    (a)  is a partner in a partnership comprised of all the persons who subscribe their names to the incorporation document (and no-one else), or
    (b)  holds the property conveyed or transferred as nominee or bare trustee for one or more of the partners in such a partnership.
    (1B)  The second condition is that--
    (a)  the proportions of the property conveyed or transferred to which the persons mentioned in subsection (1A)(a) are entitled immediately after the conveyance or transfer are the same as those to which they were entitled immediately before its incorporation, or
    (b)  none of the differences in those proportions has arisen as part of a scheme or arrangement of which the main purpose, or one of the main purposes, is avoidance of liability to any duty or tax.
    (1C)  For the purposes of subsection (1A) a person holds property as bare trustee for a partner if the partner has the exclusive right (subject only to satisfying any outstanding charge, lien or other right of the trustee to resort to the property for payment of duty, taxes, costs or other outgoings) to direct how the property shall be dealt with.")
 
  
After Clause 12
 
  
BY THE LORD GOODHART
THE LORD PHILLIPS OF SUDBURY
THE LORD SHARMAN
 
41     Insert the following new Clause-- 
     ("  .  In the Insolvency Act 1986, after section 214 insert--Insolvency: contribution by member to partnership assets where property withdrawn.
 Contribution by member to assets of limited liability partnership where property withdrawn.     214A.--(1)  This section has effect in relation to a person who is or has been a member of a limited liability partnership where, in the course of the winding up of that limited liability partnership, it appears that subsection (2) of this section applies in relation to that person.
 
    (2)  This subsection applies in relation to a person if--
 
  
    (a)  within the period of two years ending with the commencement of the winding up, he was a member of the limited liability partnership who withdrew for his own benefit property of the limited liability partnership, whether in the form of a share of profits, salary, repayment of prepayment of interest on a loan to the limited liability partnership or any withdrawal of property, and
 
  
    (b)  it is proved by the liquidator to the satisfaction of the court that at the same time of the withdrawal he knew or had reasonable grounds for believing that the limited liability partnership--
 
 
            (i)  was at the time of the withdrawal unable to pay its debts within the meaning of section 123 of the Act, or

            (ii)  became so unable to pay its debts after the assets of the limited liability partnership had been depleted by that withdrawal taken together with all other withdrawals (if any) made by any members contemporaneously with that withdrawal or in contemplation when that withdrawal was made.

 
     (3)  Where this section has effect in relation to any person the court, on the application of the liquidation, may declare that that person is to be liable to make such contribution (if any) to the limited liability partnership's assets as the court thinks proper.
 
    (4)  The court shall not make a declaration in relation to any person the amount of which exceeds the aggregate of the amounts or values of all the withdrawals referred to in paragraph (a) of subsection (2) made by that person within the period of 2 years referred to in that paragraph.
 
    (5)  The court shall not make a declaration under this section with respect to any person if it is satisfied that, after each withdrawal referred to in subsection (2), he had reasonable grounds for believing that there remained a reasonable prospect that the limited liability partnership would avoid going into liquidation.
 
    (6)  For the purposes of this section a limited liability partnership goes into insolvent liquidation if it goes into liquidation at a time when its assets are insufficient for the payment of its debts and other liabilities and the expenses of winding up.
 
    (7)  In this section "member" includes a person in accordance with whose directions or instructions (otherwise than by way of advice given by him in a professional capacity) the members of the limited liability partnership are accustomed to act.
 
    (8)  This section is without prejudice to section 213."")
 
42     Insert the following new Clause-- 
 ("Insolvency: preferential debt liability 
     .--(1)  Subject to subsection (2), the members of a limited liability partnership or oversea limited liability partnership which has been wound up (including persons who ceased to be members before the commencement of the winding up) shall be liable for its preferential debts (within the meaning given by section 386 of the Insolvency Act 1986) so far as such debts have not been discharged in the winding up.
 
    (2)  Subsection (1) shall apply in relation to any member only to debts incurred while he was a member.")
Insolvency: liability for preferential debts.
  
Clause 14
 
  
BY THE LORD GOODHART
THE LORD PHILLIPS OF SUDBURY
THE LORD SHARMAN
 
43     Page 6, line 34, at end insert--
    ("(  )  requiring limited liability partnerships and oversea limited liability partnerships or any category of limited liability partnership or oversea limited liability partnership to effect and maintain policies of insurance on such terms and for such amount as may be specified against such risks as may be specified (including risks of negligence by a member, agent or employee of the limited liability partnership or oversea limited liability partnership),")
 
  
BY THE BARONESS BUSCOMBE
 
44     Page 6, line 43, at end insert--
 
    ("(2)  Regulations under this section shall in relation to the acquisition of, or merger with, a business by a limited liability partnership, make provision enabling the limited liability partnership to elect to account for that acquisition either using merger accounting or acquisition accounting methods, as its members see fit.")
 
  
Clause 15
 
  
BY THE LORD LUCAS
 
45     Page 7, line 2, at end insert--
 
    ("(  )  Regulations may provide for the manner in which the accounts of a limited liability partnership are to be consolidated in the accounts of a member who is a body corporate.")
 
  
Clause 16
 
  
BY THE LORD McINTOSH OF HARINGEY
 
46     Page 7, line 16, after ("regulations") insert ("(whether or not together with other provisions)") 
47     Page 7, line 31, leave out ("subsection (4) applies to the regulations)") and insert ("a draft of it has been approved by a resolution of each House of Parliament)") 
  
Clause 17
 
  
BY THE LORD McINTOSH OF HARINGEY
 
48     Page 7, line 39, at end insert--
    (""business" includes every trade, profession and occupation,")
 
  
In the Schedule
 
  
BY THE LORD PHILLIPS OF SUDBURY
THE LORD GOODHART
THE LORD SHARMAN
 
49     Page 9, line 41, at end insert ("but shall for a year after the change show the replaced name (prefixed by the words "formerly registered in the name") on all invoices, contracts, accounts, notepaper and such other documents of the partnership and representations and in such media and manner as the Secretary of State may by regulations prescribe") 
  
BY THE LORD McINTOSH OF HARINGEY
 
50     Page 11, line 10, leave out ("trades or") 
51     Page 11, line 15, after ("name,") insert ("commits an offence.
 
    (2)  A person guilty of an offence under sub-paragraph (1)")
 
 
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